D4.3 Report on the main policy implications of the potential of hydrogen for regional electricity grid congestion mitigation

As a short supplement, this deliverable serves as a policy recommendation document in regards to the results derived from deliverable D4.1 and D4.2. Both deliverables investigated solutions for mitigating the prevalent and ongoing electricity grid congestion in the Netherlands from a regional perspective via the implementation of PtG systems (e.g., via electrolyzers) and other flexibility providing options such as utility scale batteries and curtailment techniques. It was shown that local PtG investments and subsequent hydrogen blending can be a first step towards local integration of electricity and gas systems. These investments can help by offering a solution for local e-grid congestion problems; enhancing the profitability of RES investments; and improving local security of supply conditions. They can also act as a stepping stone to synergistically serve an increasing number of end users besides local industry (e.g. mobility and the built environment); and may act as a dominant enabler of a decisive decarbonisation trend in the entire relevant area.

This can be done by:

1. Authorities providing as clear information as possible on local supply-side congestion perspectives.  
2. That reliable information is provided if local investment in a hydrogen blend really involves a step towards full decarbonisation of natural gas use in decentral industries: one has to be sure that ultimately one will be able to implement pure green hydrogen via increasing blending percentages.
3. Reducing the regulatory uncertainty of if and when the gas transmission service operator (TSO) and/or distribution service operators (DSOs) are legally allowed and/or capable to facilitate a ‘pure’ hydrogen transport connection to the gas grid, or, in the preceding stages, to apply blends of hydrogen in the grid.

Results also clearly indicated that a mix of flexibility solutions can cost-effectively reduce electricity grid reinforcement needs and therefore societal costs, but only if cost-benefit analyses are systematically implemented and new legislation and regulatory measures are introduced supporting that the incentives to get to the optimal solution are implemented. These alternative options require alignment of stakeholders interests and a supportive legislative and regulatory framework. Hence some main recommendations can be given to policy makers:

• Identification of which specific legislations and regulatory measures would be required to provide right incentives for solar park and wind farm operators, regional grid operators, and electrolyser and battery operators such that maximum green energy benefits are delivered against lowest overall costs.
• Based on systematic regional prognoses for new decentral renewable capacities and electricity demand, regions should be identified where electricity supply will exceed demand regularly. This information can be used to identify the regions in which decentral hydrogen production is the most promising. This information should be made public so that new investors in solar (and wind) capacity and the distribution grid operator can together investigate several options to integrate the additional renewable energy in the system.

Given the seriousness of the domestic e-grid congestion issues such developments are urgently needed (both for the distribution and transmission e-grid); in fact not having them in place can be seen as a serious obstacle for green hydrogen and battery investment, and a stimulus for growing undue e-grid congestion.